updated 06:25 pm EDT, Fri July 13, 2012
Terms prior to Motorola acquisition sidestep Motorola demands
According to patent analyst Florian Mueller, a Microsoft filing with the US International Trade Commission (ITC) claims that Google, Motorola's new parent company, committed to license two of the H.264 video encoding patents to Microsoft as a virtue of the search engine giant's participation in the MPEG LA AVC patent pool. Motorola has filed an opposition to the motion for partial termination of the ITC investigation. At stake is a difference in license payments of $120 million per year demanded for the patent by Motorola, versus a cap of $6.5 million if the patent is acquired through the MPEG LA group.
Microsoft claims that Google agreed to grant a worldwide license as part of the MPEG LA AVC essential patent rules, under the standard rate agreement, rather than the exorbitant rates Motorola wishes to charge the console maker. Motorola refused to license to Microsoft while independent, and while independent, Motorola wasn't subject to MPEG LA's licensing requirements, being neither a licensee or licensor.
Motorola's new status as a Google subsidiary makes it subject to licensing agreements previously negotiated by the search company, along with any licensing deals established after the acquisition. As stated, Google's primary goal for paying $12.5 billion for Motorola was the acquisition of the manufacturer's patent portfolio, to gain leverage over other companies such as Microsoft and Apple, which continue to sue Android phone manufacturers over infringement in a number of cases.
Motorola is also asserting 802.11 wireless networking patents in its multi-faceted legal battle with Microsoft. These remain unaffected by the alleged license terms granted by Google on the H.264 video playback patents prior to the Motorola acquisition.
In the end of June, Motorola refused Microsoft's FRAND-friendly MPEG-LA rate while, at the same time, offering to pay a fair, reasonable, and non-discriminatory (FRAND) rate for Microsoft's patents that it infringes. Google and Motorola are allegedly under investigation by the US Federal Trade Commission for violations of standards-essential patent licensing.